Interim Report January–March 2024: Continued focus on the future in a cautious market

First quarter

• Order intake amounted to 527.5 MSEK (617.3).
• Net sales were 598.5 MSEK (623.2).
• EBIT amounted to 74.5 MSEK (85.2).
• EBIT margin was 12.4% (13.7).
• Profit after tax amounted to 51.3 MSEK (55.8).
• Earnings per share reached 1.78 SEK (1.95).
• Free cash flow improved to -8.4 MSEK (-39.3).
• The Beijer Electronics business entity decided on a new strategy with a focus on profitable growth.
• The Westermo business entity established a sales office in Denmark.
    

Comments from CEO Jenny Sjödahl

“The development in the first quarter of 2024 shows a sequential improvement for order intake, sales, and earnings. Compared to the previous year, however, Ependion’s business was affected by weaker demand for both business entities driven by the uncertainty in the world economy and the high interest rate. With an EBIT margin of 12.4%, I can state that the Group succeeded better in mitigating the negative effects on the bottom line than during the fourth quarter last year.

Ependion’s order intake decreased to 528 MSEK for the period. For the Group as well as for the two business entities, order intake was lower than in the first quarter last year, but stronger than in the immediately preceding quarter.

For Westermo, order intake amounted to 310 MSEK, where the train, trackside and energy segments all contributed to stronger order intake than in the fourth quarter. However, the record-breaking first half of 2023 is disturbing the comparison because Westermo’s, and also the Group’s, largest customer then extended their order horizon, which led to a very high order booking that did not reflect the underlying demand. The business entity’s order backlog amounted to a continued strong 906 MSEK at the end of the period, of which just over half refers to deliveries in 2024.

For Beijer Electronics, the order intake in the quarter totalled to 219 MSEK, an improvement compared to the fourth quarter of 2023, but lower than the same quarter last year. The weak development in Asia contributed to the decline, while Europe developed slightly positively, and North America was stable. The business entity’s order intake was also affected by the strategic decision in 2023 to discontinue the business within Display Solutions, a product area with low margins. Beijer Electronics’ order backlog amounted to 302 MSEK at the end of the period.

The Group’s sales for the first quarter amounted to 599 MSEK, which is slightly lower than for the equivalent period last year but stronger than the previous quarter. While Westermo increased invoicing to 364 MSEK, Beijer Electronics reduced sales to 236 MSEK. During the period several future-oriented investments in profitable growth were made. Westermo opened a sales office in Denmark with a focus on the energy segment, at the same time as the work on the previously decided establishment in India proceeded according to plan. Beijer Electronics presented its new strategy. To be able to sustainably perform in line with Ependion’s financial goals going forward, the business entity will prioritize three areas: marine applications, machine builders in the manufacturing industry, and solutions for demanding environments. During the quarter the new strategic focus has been communicated in the organization and the implementation phase has begun.

EBIT for the first quarter of 2024 decreased to 74 MSEK, with an EBIT margin of 12.4%. It is weaker than the comparison period, but clearly better than the fourth quarter last year. Westermo’s EBIT increased slightly to 55 MSEK, while the EBIT margin fell to 15.2% mainly as a result of a temporarily poorer product mix in deliveries. Beijer Electronics’ EBIT amounted to 31 MSEK with the EBIT margin of 13.3%, which is weaker than the comparison period results but significantly better than in the fourth quarter last year. The cost reduction program that was initiated in the third quarter of 2023 with the main focus on Asia has now given the desired effect, which contributes to strengthened margins compared to the previous quarter.

The Group’s product development initiatives constitute the engine behind our organic growth ambition, and development expenses accounted for 12.6% of sales during the period. During the quarter, Westermo has launched several new product lines that complement and renew the offering.

Beijer Electronics’ development of next generation HMIs is in an intense phase, aiming for launch before the end of the year.

The work to integrate sustainability as a natural part of our operations continues, and although there is much left to do, I am pleased that our progress on sustainability issues has increased significantly. During the quarter, we worked on the development of a double materiality  assessment at Group level in accordance with the EU’s new CSRD regulations, while the business entities’ continued with concrete sustainability-related activities. In our Annual and Sustainability report published during this period, we provide examples of how we address these issues.

The beginning of the year has not given us reason to change our outlook for 2024: external factors remain uncertain, and we see a subdued demand because of weaker economic conditions. In the short term, the lower order intake rate at Westermo over the past three quarters has led to a weaker order backlog for the second quarter. While selectively making forward-looking investments, both business entities are working to increase efficiency and adjust costs to the volume development. Our positive outlook on the long-term growth opportunities in our focus segments remains unchanged, as the demand for our products and solutions is driven by strong global trends such as digitalization and the green transition.”
   

Invitation to presentation of the report

Today, a conference call will be held for press and analysts, where President and CEO Jenny Sjödahl and CFO Joakim Laurén present the company and comment on the report.

Time: Wednesday, April 24, 14:00 CET

To participate in the conference please dial:

From SE: +46(0) 0200 899 189
From UK: +44(0) 800 652 2435

To access the presentation please use this link:
http://momentum.adobeconnect.com/ependionq12024report/
 

The report and the presentation will be available at the company’s website www.ependion.com. A recording of the conference call will also be available here after the event.

Welcome to join!

This disclosure contains information that Ependion AB is obliged to make public pursuant to the Swedish Securities Markets Act (2007:528). The information was submitted for publication, through the agency of the contact person, on 24-04-2024 13:00 CET.

For more information please contact:

President and CEO, Jenny Sjödahl, tel +46 (0)725 89 60 80
Executive VP and CFO Joakim Laurén, tel +46 (0)703 35 84 96

Ependion AB is an expansive global technology group delivering digital solutions for secure control, management, visualization and data communication for industrial applications in environments where reliability and high quality are critical factors. The Group’s customers include some of the world’s leading companies. Ependion consists of independent business entities with sales of  some SEK 2.5 billion in 2023 and more than a thousand employees. The company is listed on Nasdaq Stockholm Main Market’s Mid Cap-list under the ticker EPEN. ependion.com